27,000 public sector staff face axe and pay to be cut by €1bn
THE Government will unveil plans to slash the public sector payroll by €1bn and cut staff numbers by 27,000 today.
Taoiseach Brian Cowen will launch the Government's four-year budgetary plan this afternoon, setting off €15bn worth of cuts and taxes up to 2014.
The Coalition is expected to seek a much deeper reduction in its workforce than was originally anticipated in its four-year plan by not replacing staff.
The plan will feature €10bn worth of proposed spending cuts and €5bn worth of tax increases.
The keenly anticipated plan will also feature a number of measures aimed at stimulating economic growth and increasing competitiveness.
The Cabinet yesterday signed off on the plan and the measures in it include:
- A €1 cut to the €8.65 per hour minimum wage.
- The tax net will be widened to take in more of the 50pc of workers who pay no tax at all.
- The first phase of a property tax could be introduced as early as next year in the form of a "local services charge" of around €100.
- There will be a 5pc cut to child benefit payments and other social welfare payments.
- The 120,000 people receiving public sector pensions could face a levy of up to €200 each, but those on state pensions will escape the axe.
The plan is being driven by the need to show the EU that the country can reduce its deficit -- an eye-watering 32pc of national income this year -- to just 3pc of national income by 2014.
Sources revealed the Government will target a €1bn reduction in its payroll by 2014, mainly through the reduction in staff.
The gross Exchequer pay and pensions bill currently stands at just under €19bn and makes up over a third of spending.
The Government's new staffing target will bring the 307,000 strong workforce back to its level in 2006, at around 290,000.
However, more than half of the 27,000 departures it will announce today have already been achieved.
The figure includes a reduction of around 12,000 staff due to the recruitment embargo and an incentivised early retirement scheme.
It also includes an expected cut of over 3,000 staff in the HSE by the end of the year under voluntary exit schemes.
Slashing the workforce will not mean compulsory redundancies and, as a result, will not lead to union opposition because it will not breach the Croke Park deal.
However, there are still fears among public servants that the Government could invoke a clause in the agreement that means it can walk away in the event of an unexpected budgetary deterioration.